America’s First “Declinist” President

POITOU, FRANCE – Public figures and public events are almost always fraudulent in some way.

France’s Bastille Day is no exception. It is hailed as a landmark of liberty.

But the storming of the Bastille prison by revolutionaries, on this day in 1789, led to the liberation of only seven miserable perverts and half-wits.

And it was followed by the mass murder of thousands in The Terror – the bloodiest period of the French Revolution – and the deaths of 5 million more in the Napoleonic Wars.

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Drugs and Video Games

But today, we turn away from the swindles of politics and back to the old familiar flimflam. We’re talking about economics and finance!

In yesterday’s news, we found a couple new explanations for why this century has been such a dud.

First, Fed chief Janet Yellen offered this clue, from MarketWatch:

We’ve had many decades of declining labor-force participation by prime-age men, and I think this reflects a whole variety of adverse trends related particularly to technological change that’s eliminated many middle-income jobs.

Many individuals with less education are finding it difficult to be placed in jobs that are middle income jobs. And so this perhaps intensified during the recession, but it is a much longer lasting trend. We’ve seen now unfortunately this is likely tied to the opioid crisis.

I don’t know if it’s causal, or it’s a symptom, of long-running economic maladies that have effected [sic] these communities.

Then came The Wall Street Journal, pointing a finger:

Academics from Princeton University, the University of Chicago and the University of Rochester say there’s ample evidence that since 2000, men who would otherwise be working are instead being drawn into immersive virtual worlds, giving up paychecks in the process.

What’s more, these men are reporting higher levels of happiness compared with those who work, and they’re drawing on the support of mom and dad to stay there.

The men who essentially drop out don’t end up getting by via government support. Instead, they’re enabled by family members. The researchers found that nearly 70% of these men who aren’t working lived with a close relative in 2015, versus 46% in 2000.

Whether they take drugs or play video games is none of our business. And if their families want to support them… well… bully for them.

Best Days Behind

That is, he’s the first to recognize that the country’s best days are probably behind it. “Make America great again” was a promise with an admission built into it.

But you can’t go back unless you’re willing to stop going ahead. To the annoyance of our dear readers, we doubted it was possible. Empires don’t turn around. And Mr. Trump showed no sign of understanding what bus he was on or where it went.

Now, six months into the new administration, it is becoming clearer and clearer that we were both right: America is in decline. And President Trump is not going to fix it.

Here’s Foreign Policy magazine:

[A]ccording to a new report from the Pew Research Center, which released results of a 38-nation survey Thursday afternoon. While the majority of those polled still correctly believe the United States is the world’s biggest economy, 12 nations – including Canada, Russia, and most of western Europe – believe China has the largest economy in the world.

Pew detected a dramatic shift; only six nations said Beijing possessed the world’s strongest economy when the question was asked between 2014 and 2016. Since then, the number of countries that view the United States as playing second fiddle to China has doubled. And more striking is the change that’s taken place in just the past year: Canada, Britain, Germany, Spain, and Italy all went from seeing America as the biggest player to viewing China as the top dog.

Economic growth rates in the U.S. are only half of what they were in the glory years and less than half of China’s growth rate… with no sign of picking up.

Corrupt and Ineffectual

Not only that, neither Democrats nor Republicans are willing to discuss the real problem nor are bold enough to offer proposals to turn it around.

Why not?

Because they are both part of the problem, not the solution.

Before the French Revolution, the elite had become corrupt, effete, and ineffectual. They were the beneficiaries of the win-lose deals imposed on the people by the government. Now, it is today’s elite who benefit from the win-lose deals; they’re not about to give them up.

Why so little growth?

Because too many people and too many resources are shifted to cronies and zombies rather than being invested in the real economy. Some of the zombies are playing video games. Some are doing drugs. Some are doing both.

What interests us are the influences that have reduced the labor participation rate for working-age men from 76% in 1990 to only 69% today.

That represents about 6 million men who would otherwise be contributing to growth and output. Instead of adding valuable goods and services, they are consuming them.

Altogether, there are said to be about 102 million working-age people without jobs. Since there are only about 200 million working-age people, that means that more than 1 out of 2 is unemployed.

What’s worse, more and more of those who do have jobs work in “low-productivity” fields – such as government, leisure, education, and health.

Bread and Circus Jobs

Friend and former Reagan cabinet member David Stockman has done an excellent job in his Contra Corner newsletter of detailing the shift from “breadwinner” jobs to “bread and circus” jobs in this century.

Since 2000, the number of high-wage jobs in mining, manufacturing, and construction – industries that typically employ men – has gone down by about 15%.

In manufacturing, the number of jobs has fallen back to a level last seen 72 years ago.

Most of the new jobs have been created in service sectors – parking cars, tending bar, cleaning houses – where many are part time and pay an average of only $21,000 a year.

Heck, faced with these alternatives, we might rather play video games in Mom and Dad’s basement, too!

Monday… why the U.S. is on the skids… and what can be done about it.

Regards,

Bill

Currency Insight: No “Trump Bump” for the Dollar

BY CHRIS LOWE, EDITOR AT LARGE, Bonner & partners

Currency traders continue to cast a vote of “no confidence” in the Trump economy.

Traders buy a nation’s currency when they see strong economic growth ahead… and the rise in interest rates this typically brings with it.

The higher interest rates go, the more interest income traders earn on their currency deposits.

When traders sell a nation’s currency, it signals they don’t have confidence the economy will improve… and that interest rates will stay flat or fall as a result.

Today’s chart is of the U.S. Dollar Index. It tracks the exchange rate of the dollar versus a basket of six major trading-partner currencies.

When the line on this chart is rising, the dollar is strengthening against its rivals – traders are betting on stronger growth and higher interest rates.

When the line is falling, the dollar is weakening against its rivals – traders are betting on lower growth and flat or falling rates.

As you can see, after Trump’s election win last November, traders bid up the dollar on hopes that Trump would unleash a wave in economic growth.

After he took office in January, traders reversed those bets on fears that Trump would not be able to deliver that growth.

— Chris Lowe

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Mailbag

Thank you for pointing out the excellent qualifications of Mr. Macron. He has a fine education and prior experience in public service. And yes, he’s young and good-looking. Let’s not hold that against him.

What concerns me is your use of a meme without meaning: the so-called “deep state.” This alt-right slur is randomly thrown out to disparage seemingly anyone who has worked in government. The shadow of deep statism appears to fall most heavily upon the U.S. intelligence services and naturally the State Department but inexplicably stops at the gate of the Pentagon and military forces.

Your letter highlights the difficulties French farmers face from excessive regulation. Unnecessary regulation is certainly worthy of robust debate but, as you rightly suggest, should not be a subject used as a broad brush against all public service experience. Experience, especially deep experience, in military matters or international relations should not be viewed as a disqualifying impediment, but instead as a prerequisite for high office.

Perhaps you could address the deeply rooted resentment against education and expertise, sometimes referred to as a know-nothing tendency, in American political and personal life. Perhaps it’s tied into our love of rooting for the underdog, which I have learned is not universally shared.

I think that the French are right to be proud of their contributions to cuisine and to the American Revolution. And so far, at least, they have every reason to be proud of their President. A happy Bastille Day to you and your family.

Just read your article “America’s Elites Are on Top of the World.” I submit that the real “tell” of David Brooks being an elite is that he didn’t stop to consider that the reason his friend had that unhappy look on her face and wanted to go elsewhere is that she just doesn’t like that kind of food. It may have had nothing at all to do with the language in which the menu was written.

– Linda H.

Great article. I hope David Brooks’ friend doesn’t read the article. Maybe he cannot even consider that “only a high school grad” would or could read The New York Times. I like it when you dip “voter plume” into the hemlock. Yes, once in a while I become the target, however, that is a small price to pay in order to enjoy your writings.

– Herm Y.

America’s Elites need to take the “Irreplaceability test.” Dip one finger in a glass of water and measure the hole that’s left when they remove their finger.

– Walter C.

In Case You Missed It…

In early February last year, colleague Jeff Brown went in front of a small audience of multimillion-dollar family offices to present his best recommendation.

The company he named that day, chipmaker Nvidia, went on to become the best-performing stock of 2016. It climbed over 330% in one year.